Chicago | Reuters — Chicago Mercantile Exchange benchmark December lean hog futures fell about four per cent on Tuesday, hitting a 10-month low on technical selling and worries about consumer demand for meat, traders said.
Brokers shrugged off strength in outside markets including crude oil and Wall Street equity markets, which firmed as fears eased about the health of the global economy.
“The biggest thing we have is technical selling,” Don Roose, president of Iowa-based U.S. Commodities, said of the decline in hog futures. “The technicals are weak in the meat sector, both cattle and hogs, so it’s technical selling pushing us into a deeper over-sold situation,” Roose said.
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CME December lean hog futures settled down 3.3 cents at 74.425 cents/lb. after dipping to 72.975 cents, below psychological support at 73 cents and the contract’s lowest since late November (all figures US$).
Commodity funds hold a net long position in CME lean hog and live cattle futures, leaving both markets vulnerable to bouts of long liquidation.
Cash hog prices continued their downward trend but still maintained a premium relative to lean hog futures. The CME Lean Hog Index, a two-day weighted average of cash hog prices, slipped to $94.33 per hundredweight (cwt), its lowest since mid-February.
Wholesale pork prices fell on Tuesday afternoon, with the U.S. Department of Agriculture pricing pork carcasses at $98.29/cwt, down $1.64 from Monday.
In the cattle markets, futures declined as traders waited for cash cattle trade to pick up. CME October live cattle ended down 0.125 cent at 144.2 cents/lb. and the most-active December contract fell 0.525 cent to 147.5 cents.
CME November feeder cattle closed down 0.85 cent at 175.2 cents/lb.
Meatpackers slaughtered an estimated 128,000 cattle on Tuesday, matching the week-ago total and up from 122,000 cattle a year ago, USDA said.
In the pork sector, packers slaughtered an estimated 487,000 hogs, up from 483,000 hogs a week ago and 479,000 hogs a year ago.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.
